Liquid Network is investigating an unusual peg-out of 3,996 BTC, worth approximately $318.4 million when Bitcoin traded near $79,675, after the actors behind the withdrawal described themselves as whitehats in an on-chain message. Ledger CTO Charles Guillemet challenged that characterization, arguing that legitimate researchers generally disclose vulnerabilities before moving substantial collateral. Liquid said the withdrawal used SideSwap’s Peg-out Authorization Key (PAK), but the key and other authorization keys remained secure. The transaction represented roughly 95% of Liquid’s Bitcoin reserves, although corresponding LBTC was burned, leaving the remaining supply backed by matching Bitcoin. Most withdrawn funds remained concentrated, while exchanges paused or prepared to pause LBTC deposits and withdrawals and bridge nodes were temporarily disabled. Liquid and federation members are investigating how the authorization process permitted the withdrawal and whether the BTC will be returned.